Most real estate agents are concerned by the prospect of representing purchasers that are attempting to purchase vacant land for the purpose of constructing a residence. If the purchasers are working with a developer or builder that is familiar with the issues and pitfalls and that has a staff to determine feasibility, it is not very challenging to represent the purchasers. However, when a consumer wants to buy vacant land with the hope of building upon the property, there are a myriad of concerns that must be considered.
Realtors generally are not intimately familiar with most of the critical questions that need to be asked and answered. The best course of action would be to have the buyers retain the services of a competent land use engineering firm to analyze the project, although the engineering cost is likely to be well in excess of $10,000.00 just for the initial phases of the inquiries. As an alternative there are custom home builders that can provide crucial guidance in the feasibility of a project.
I suggest that any contract for the purchase of vacant land includes a provision that “The Seller warrants and represents that the lot is immediately buildable without burdensome conditions and all utilities are available at the property for immediate use”. That does not minimize or eliminate the need for meticulous studies to be conducted, but it provides a bit of assurance of buildability. A feasibility/study period should always be incorporated into the contract, and the necessary duration of 45-90 days is certain to be resisted by a seller. However, during that time, some of the following questions need to be answered:
- Where on the lot could a house be built? Are there setbacks, zoning restrictions, septic limitations, rights of way, covenants, wetlands, conservation easements, or other restrictions?
- Is there a valid recent perc test if applicable and how many bedrooms would a septic system support, or is public sewer available?
- Is there adequate potable water or access to public water?
- Where are the utilities and is there a cost to bring them in and activate them at the lot?
- Are the boundaries clearly and accurately marked without encroachments?
- Can the seller provide a clear title?
- Is the property zoned for the intended use and are there any plans for the zoning to be changed?
- Is there access to a publicly maintained road?
- Are there any harmful subsurface conditions such as hazardous chemicals, buried farm vehicles, oil tanks or other toxins?
- Is any part of the property in a flood plain as determined by the army corps of engineers?
- Does the buyer have any idea of the building costs and budget for construction including engineering, construction, permits, and any other costs that make up the total cost to complete the project and obtain a use and occupancy permit?
- What is the time frame for construction, that is, when does the buyer want to be able to occupy or sell the completed structure, and how long will the local jurisdiction take to obtain approvals?
The list above is merely a small snapshot of issues to be considered when buying vacant land. It is easy to understand why so few agents are comfortable representing buyers who are looking to purchase vacant land. However, because it should be expected that most of the issues are to be investigated and answered by very specific professionals, the role of the agent is compressed into locating the property and helping the purchaser find the best support team. Please feel free to contact me at [email protected] or 301-252-7867 if you have additional questions about this topic.
James E. Savitz, Esq.